Former New York Federal Reserve Bank Examiner Carmen Segarra has a filed a wrongful termination lawsuit against the New York Federal Reserve. In the suit Segarra claims that while acting as a bank examiner for the NY Fed she was told to falsify findings on Goldman Sachs and when she refused was fired.
Under a Fed mandate, the investment banking behemoth was expected to have a company-wide policy to address conflicts of interest in how its phalanxes of dealmakers handled clients. Although Goldman had a patchwork of policies, the examiner concluded that they fell short of the Fed’s requirements.
That finding by the examiner, Carmen Segarra, potentially had serious implications for Goldman, which was already under fire for advising clients on both sides of several multibillion-dollar deals and allegedly putting the bank’s own interests above those of its customers. It could have led to closer scrutiny of Goldman by regulators or changes to its business practices.
Instead of Goldman being scrutinized Segarra was. According to the suit, when Segarra refused to alter her findings on Goldman not complying with the conflict of interest requirements her bosses told her she was no longer trusted, confiscated her phone, and he had her marched out of the building by security officers.
The New York Fed is notorious for being too close to Wall Street with a revolving door of banksters spinning between Wall Street banks and positions at the Fed – Goldman Sachs especially.
Goldman is known for having close ties with the New York Fed, its primary regulator. The current president of the New York Fed, William Dudley, is a former Goldman partner. One of his New York Fed predecessors, E. Gerald Corrigan, is currently a top executive at Goldman. At the time of Segarra’s firing, Stephen Friedman, a former chairman of the New York Fed, was head of the risk committee for Goldman’s board of directors.
The list goes on and on. The NY Fed is one of the most glaring examples of a regulator captured by the industry it is supposed to be regulating. They not only see things Goldman’s way, regulators are often going to be heading Goldman’s way after their “public service.” It’s corruption plain and simple.
Ms. Segarra’s suit could provide insight into the inner sanctum of one of America’s most powerful and most corrupt federal agencies.